Postal rates to go up, again

First there is talk of dropping a day of mail service. Now the U.S. Postal Service is proposing to raise the price of a stamp to 46 cents from the current 44 cents, a 4.5% increase, and it has a big fight on its hands.

Mailers of all stripes are gearing up to fight the increase, which the USPS announced today. It last raised rates on first class postage May 11, 2009. The USPS blamed declining mail volume and cost increases as the reasons behind this latest proposed hike.

Mailers suggest the hike is 10 times the increase allowed by law.

"This proposed rate increase amounts to another tax imposed on Americans at a time when the economy can least afford it," said Tony Conway, Executive Director of the Alliance of Nonprofit Mailers and a spokesperson for the Affordable Mail Alliance in a statement. "Consumers everywhere will pay more for the letters and packages they need to send; struggling businesses – large and small -- will suffer and even more jobs will be lost."

Jim Cregan, executive VP of the Magazine Publishers of America in an interview called the hike "a wrong-headed move on the law, the economics and public policy."

Most rates would increase from 4% to 6% -- for instance, postcards would rise 2 cents to 30 cents. Parcels under 1 pound sent standard mail would rise 23%. Heavier parcels would rise 4% to 6%.

The request has to be considered by the Postal Rate Commission, making Jan. 2, 2011 the earliest the new rate can take effect.

The U.S. Postal Service has been battered by two forces -- the impact of email and web bill payments, and also by the economy. The combination has dropped postal volume by 23% since 2008.

"People are doing more bill paying, communicating and shopping on line," said JoAnne M. Veto, senior manager of postal service communications in an interview. "The whole switch to how people communicate has impacted volume."

With volume down, the Postal Service has fewer pieces of mail to pay the same fixed costs.

Postmaster General John E. Potter in a statement today said the Postal Service has tried to respond by cutting employment and costs but can't do enough without raising prices.

"There is no one single solution to the dire financial situation that the Postal Service faces," Potter said. "These proposed rate adjustments are moderate and part of a fair and balanced approach to insuring mail service for all Americans well into the future."

The Postal Service estimates that for the average household, the increase will cost 13 cents more a month.

In March Potter proposed going to a five-day delivery from six days and restructuring Postal Service health benefits.
Mailers are upset because they thought a new postal law limited any cost increases to the cost of living and because they have been working with the Postal Service to get permission from Congress for a restructuring of pension and health care obligations. The restructuring could allay the need for any rate increase.

While mailing groups usually fight each other on rate increase, this time all have joined together to oppose the rate hike arguing the Postal Service hasn't sufficiently cut costs, didn't comply with a 2006 law and that the move threatens to hurt attempts to convince Congress to restructure Postal Service health care and pension costs.

"This is going to drive our members away," said Jerry Cerasale, executive vice president of the Direct Marketers Association. "They are already looking at other alternatives. This will be the death spiral for [the Postal Service.]"